Publicis warns on meeting sales growth target

French advertising group Publicis has warned it would be "very difficult" to meet its sales growth target this year after a second-quarter slowdown, caused in part by the failure of its planned merger with Omnicom in May.

Organic or self-generated sales growth fell to 0.5 per cent from 3.3 per cent in the first quarter, the company said yesterday, below its 4 per cent annual target and short of analysts' expectations, with growth in North America not enough to offset weakness in Europe and sluggishness in China and India.

Shares in Publicis, whose global advertising brands also include Leo Burnett and Saatchi & Saatchi, closed down 4.7 per cent at €56.11 , their lowest since August last year, a month after the planned "merger of equals" with Omnicom was unveiled.

Publicis is the world's third- largest advertising group after Britain's WPP Plc and its deal with Omnicom was supposed to create the world's largest agency, best-equipped to compete in the internet era. They called it off in early May after a battle for control and divergent corporate cultures. Omnicom said separately it remained on track to hit its full-year organic revenue growth target of between 4 and 4.5 per cent, after posting higher-than-expected quarterly revenue and profit.

Publicis chief executive Maurice Levy said the strong euro was also to blame for chipping away at Publicis's growth, currency effects having stripped €148 million out of revenue in the first half.

Asked why Publicis was trailing rivals such as Interpublic, which posted organic sales growth of 4.7 per cent in the second quarter, Mr Levy said that trying to rescue the floundering Omnicom tie-up had taken up a lot of management time. “There was a negative effect, which we had somewhat underestimated, from our intense concentration on the merger,” he said. “But that’s behind us now and we are focused on the future.” – (Reuters)